Nov 25th, 2008   print     email   Post a comment Listen to the Article

The Saudi government is adamant on promoting ‘Saudization’, the process of providing more job opportunities for locals.

The cabinet has just announced that any company that invests at least SR1 million, and employs a minimum of five Saudis in basic technical and administrative jobs for a year, will receive tax benefits, reports Arab News.

“A 50 percent tax cut has been offered on the annual cost of training Saudis, and another 50 percent tax cut on annual salaries paid to Saudis,” said the nation’s Culture and Information Minister, Iyad Madani.

Currently, the tax rate of a resident company in Saudi is 20 percent of its tax base (a tax base is the shares of non-Saudi partners in its taxable income from any activity within the kingdom, minus a number of expenses).

So will companies fall for the bait even though the kingdom’s labor laws make it harder to fire Saudis than foreigners?

In February this year, the labor ministry reduced Saudization quotas for specific industries from 30 to 20 percent, including foodstuffs, beverages, textiles, readymade garments, shoes, furniture and paper. The new rule also says the quota of Saudis working in these factories should never fall below 15 percent in the first two years of operation, or three years from the date of licensing.

The labor ministry said that the decision was taken because it was necessary to fulfill labor market demands.

But several people Arab News spoke to at the time, said that Saudi workers refused to work inconvenient shifts, and quit after training to take government jobs. According to the labor ministry, a majority of unemployed persons in the kingdom lack a college education.

“If recruitment of foreign workers were put on hold for six months, not a single Saudi would remain jobless,” said the Minister of Labor, Ghazi Al-Gosaibi in April this year.

“Last year, 1.7 million work visas were issued,” he said, “which was the highest number in the history of the Kingdom.” He then said that allowing those visas to be processed to happen was like taking poison.

Around eight to nine million of Saudi Arabia’s population of over 25 million are expatriates.

Gosaibi said his ministry managed to find jobs for 50,000 Saudis in each of the past few years, falling far short of its aspirations.

“Our goal is not to employ Saudis in any employment but to give them the right job, to give them skills. Our goal is to train Saudis in jobs where they add value to the economy,” Deputy Labor Minister Abdulwahed Al-Humaid told Reuters earlier this month.

“I dream of a society where you have Saudis doing high-quality jobs. We need engineers, doctors, technicians. If we have to bring somebody from outside I prefer that it’s for simple jobs,” he said.